Achievable Miracles in Subsidized Housing

This article appeared in the Christian CenturyFebruary 16, 1977, p. 147. Copyright by the Christian Century Foundation and used by permission. Current articles and subscription information can be found at www.christiancentury.org. This material was prepared for Religion Online by Ted & Winnie Brock.

SUMMARY

Two projects operated by Ade Realty Management of Chicago are giving attention because they have traveled the road toward ruin and have returned to solvency. Their stories can provide a guide to the methods of turning near-failures into successes. A diversity of tenants is the key to success for low-cost housing projects.

Since 1968, some 400,000 rental units of publicly subsidized private housing have been constructed to fill the void left by the failures of the conventional U.S. public-housing program. Restrictions in site selection, mismanagement, and inadequate policies for tenant admission and eviction have, however, often plagued these privately operated projects as well. Too often relegated to urban slums, the projects have suffered from a concentration of extremely poor families and a disproportionate level of black occupancy. Many have already failed, and others are apparently on the road to foreclosure.

Nonetheless, a substantial number of these projects have succeeded, far more than is the case with the conventional public-housing program. Two projects operated by Ade Realty Management of Chicago deserve attention because they have traveled the road toward ruin and have returned to solvency. Their stories can provide a guide to the methods of turning near-failures into successes.

I

Crestview Village, with 132 low-rise apartments, is on the outskirts of Kankakee, Illinois -- a community of 31,000 located some 40 miles south of Chicago. Edgewood Commons, with 150 two- and three-story apartments, is in Danville (population 42,500) in central Illinois, not far from Champaign-Urbana. Both projects, occupied in 1969-70, consist of well-planned garden apartments attractively laid out on approximately ten acres. Both projects have the same private financial sponsor who allows the management virtual autonomy -- an important element in successful operation.

Still, only two years after their construction, the projects signaled trouble for the tenants, the community and the owners. In contrast to most subsidized projects, which have only 10 per cent large apartments (three or four bedrooms), 20 per cent of the units at both Crestview and Edgewood were large apartments -- and high density was a potential source of problems. In addition, the projects had become heavily populated with problem families, very poor families, and too large a proportion of black families in a community struggling with the realities of integration. Fewer and fewer people applied, and the upward-striving tenants began leaving. Only two years after their construction, both projects had declined in public esteem and had become undesirable and unprofitable.

These publicly subsidized, privately run projects were beset by the very same problems that had doomed conventional public housing. Sidney Freedman, president of Ade Realty Management, recalls that after one full year of operation, 25 per cent of Crestview’s tenants had multiple social and psychological problems; 75 per cent were delinquent in rent; over half the families received public assistance; and about one-fourth of the apartments were vacant.

To many public-spirited persons involved in social welfare, moral questions were raised by any attempt on the part of managers of publicly subsidized housing to limit the admission of families receiving public aid, one-parent families headed by women, and families with serious antisocial behavior. Although these families have been shown to constitute a high percentage of problem tenants, the primary criteria for admission utilized by most management firms have been financial eligibility and need.

Only a few firms have openly pursued a policy of selective admission of those families deemed to be more adaptable. Many managers have been fearful of criticism from the Department of Housing and Urban Development (HUD) if they deviate from a first-come, first-served admission policy. The courts, especially at the state level, have been reluctant to evict tenants even for a child’s or adult’s serious antisocial behavior, confirmed alcoholism or drug abuse that interferes with project operation.

II

The question of denying admission to families with a high probability of failure or of evicting tenants who have been unable to make the adjustment seems to trouble the administrators and judges far more than it disturbs the residents, who deal with the problem in practical terms. A young black woman living with her husband and children in a project discussed the propriety of a selective admissions policy: “I know it’s undemocratic, but it has to be done to preserve the housing for the remaining tenants.” A black unwed mother with three children in a Chicago housing project recalled: “You know, when I moved in here, most of the families had husbands and children, and it was good for my kids; now, out of ten families on the floor, there are only three men. That kind of situation isn’t good for my kids or for the project. And there are too many children. I am going to have to move.”

A young white podiatry student living in another Chicago project said: “The only difficulty in this project is some of the families that the management has admitted and then permitted to remain. The management must be firm if it intends to maintain a good development.” Similarly, Monsignor Vincent Cooke, former administrator of the Catholic Charities of Chicago, said some years ago: “No public housing project, let alone a private one, should accept too many families who receive public assistance. Children and families on welfare should have a chance to live in a community where most of the families are self-supporting and upward-striving.”

In discussing the problem of selective admissions, Freedman explains that a successful rental development, particularly a subsidized one, must attract and keep good tenants and evict unmanageable ones. “I don’t make improvements by computers or amortization tables. The name of the game is people: manager and tenants.” Crestview was almost destroyed by problem tenants because, said Freedman, “in the beginning Crestview had a poor manager. He accepted, retained, and was unable to handle his disruptive tenants. I fired him and hired Sam Warren, who is manager there today.”

“The first thing we did,” Freedman explained, “was to identify the troublemakers. First there were families with destructive kids. We had our share of these. Then we had families where one or more of the adults were addicted to drugs or alcohol, or had serious emotional and marital problems that resulted in antisocial activity disturbing to other tenants. These kinds of residents are more difficult to evict in Chicago because of the attitude of the courts. The courts in both Kankakee and Danville are more understanding of our problems, at least with our publicly subsidized units.”

Today Crestview Village, which at one point had been more than a year behind in mortgage payments, hopes to be completely current within the next few months. It is now considered a fine investment by its sponsors; it is one of HUD’s prize projects. There is only one vacancy, and rent delinquency is down to 3 per cent of the rent roll. Residents who decide to move out do so because they cannot afford the rent on their present income, because they are moving out of town, or because they are buying a house. Crestview provides a remarkable example of a housing project that almost failed and has now recovered.

III

According to Russ Cadman, resident manager of Edgebrook Commons, “Crestview Village was far easier than Edgebrook to revive as a profit venture because Crestview never had ‘location’ to fight.” Crestview was built on the outskirts of Kankakee next to a large shopping center in a sparsely populated white area. Across the street stands a 13-story middle-class high-rise apartment building whose residents are white. Edgebrook, on the other hand, is in a transitional area of Danville adjacent to Fair Oaks, a 700-unit public-housing project occupied largely by blacks, the majority of whom receive public assistance.

Cadman at first made no attempt to limit the number of difficult tenants at Edgebrook. According to Freedman, Cadman is a man of goodwill but “as a manager, he was carrying his efforts to help the needy too far.” Until a year ago, about half the tenants were behind in their rental payments, and many families were still being admitted and retained who received public assistance but were habitually delinquent in rent. Vacancies had risen to 30 per cent, and mortgage payments were falling further and further behind.

Under Freedman’s guidance, Cadman came to realize that if the project were to be preserved for the majority of low-to-moderate-income families, he would have to take a firm stand against problem tenants as well as those who were not paying their rent. He began to evict these tenants.

“Such tenants. have to learn that you are not going to mess around,” Cadman explained, “and the courts have to do their part -- which they are now doing.” He has had some difficulty with the local public defender’s office, which came to the aid of a problem tenant whose lease Edgebrook refused to renew. In attempting to protect the tenant, the lawyers overlooked the problems created for other residents and the project itself. However, with Cadman’s persistence and the aid of tenants, the offending tenant moved without the necessity of court action.

According to Freedman, Cadman’s new “hard-line” policy has made Edgebrook a much more successful project. Rent delinquency has been reduced to less than 5 per cent. Fewer than ten of the 150 units are vacant. Families receiving public assistance represent 20 per cent of the residents. Cadman attributes most of the present turnover to rising rents and unstable employment. He admits that those tenants who have to move back into substandard or public housing suffer, but “it is about the only way we’ll survive. One housing project can’t solve all of society’s problems.”

As far as possible within HUD policy, there is now at the time of application a more careful scrutiny of the family-child relationship, bill-paying habits, and housekeeping characteristics of prospective tenants. Recognizing that a prior bad credit rating is not adequate grounds for rejection, Cadman differentiates between the individual who habitually avoids paying rent to live above his or her means and the person who falls behind in rent through a sudden change in fortune. In the latter case, the credit rating is not regarded unfavorably, though admission will depend on a demonstrable source of income.

IV

Edgebrook so far is winning its battle to preserve its reputation. Cadman says that even the public-housing manager is coming around to his way of thinking in regard to tenant composition. And Edgebrook’s future may well depend on whether Fair Oaks, the public-housing project, can survive.

In these projects, says Freedman, an active tenant organization is one of the most effective safeguards against unacceptable tenants. In Kankakee he spent a considerable amount of time getting an organization started. “I told Sam Warren, ‘Let’s get five or six of our best families and have a meeting in the community hall.’ We took off our coats figuratively and literally and started a tenant union. A tenant organization needs a spark plug, and Crestview had one in Laverne McClendon, a young black woman who provided the kind of interest, intelligence and follow-through that was required.”

When residents in Crestview Village have a complaint about the noise another tenant is making or about the behavior of a neighbor’s child, they bring these problems not to the manager but to the organization, which either solves the problem or recommends eviction to the manager. According to Sam Warren, the union also helps keep out applicants whose ability to adjust is doubtful -- tenants can be tougher on screening than a manager would dare to be. Needless to say, union and management do not always agree, but when it comes to unacceptable tenants, they usually see eye to eye.

Probably the key to survival for both Crestview and Edgebrook is diversity of tenants. In view of the proportion of large families among the poor, it is necessary to provide low-rent housing for this market. However, it is also essential to house the elderly and young marrieds, and both these groups often serve as a stabilizing element as well as a positive force in tenants’ organizations.

In terms of family composition, 50 per cent of the two projects’ tenants are families with children. Of these, about half have both mother and father. The elderly compose 30 per cent; the remaining 20 per cent of the tenants are singles or young couples without children. Perhaps the real advantage of the relatively large proportion of elderly, singles and young couples is the consequent reduction in the project’s population density. In terms of racial make-up, between one-fourth and one-third are minority families.

V

No selection or eviction policy designed to produce a diverse group of residents can work unless there is a waiting list of applicants. The challenge facing the manager who seeks to improve a project’s desirability by evicting problem tenants is the lack of prospective tenants to replace them. Overcoming a bad reputation becomes more difficult if, in addition to obtaining better tenants, it also involves changing an 80 per cent black project into an integrated project of 20 to 40 per cent blacks -- a ratio acceptable to both white and black communities.

Sam Warren relates how he proceeded: I went to all the agencies I could -- churches, the YMCA, the Red Cross, the Community Chest, libraries, even factories -- anyone who might be likely to know of families who needed housing. I said, ‘send me good applicants, particularly white families, elderly families and young couples.’ I even gave special treatment to tenants for bringing me their friends as applicants. Perhaps 40 per cent of our vacancies are filled with applicants who knew one or more tenants.

“Now, after we have used all these techniques, the lookers must be converted into renters. This requires careful explanation and hand-holding, in view of the conditions of the project during the transition. In the case of the elderly, I had to make extensive use of rent supplements.”

“I don’t think many more than half of the families obtained in this manner worked out permanently. But we achieved a modicum of racial balance. Then we had to evict those who couldn’t adjust to project living and to substitute better families for them. But by this time we had less difficulty in attracting good families of any race to apply.”

Frequently the process of reducing the density of a project or keeping it diverse in family composition and income requires a broad interpretation of HUD rulings. For example, accepting families who are technically eligible though they plan to take on increased employment that may soon make them ineligible, or admitting small families or couples to larger apartments if they have a reasonable need and can pay the rent, or delaying action on rent increases to retain families who contribute positively to the project -- all these are delicate decisions.

The problem of racial balance is even more difficult. In Kankakee, where only 15 to 20 per cent of the city population is black, these figures could represent a guiding ratio for the project. But blacks generally have lower incomes and poorer housing. Said Warren: “We find we can manage the project with as many as to 40 per cent black families, and the bulk of white families will not move because of racial factors but just that percentage, no more. However, since there is always some turnover, if any especially desirable black or white families apply, they can always be accommodated within a reasonable time, since we have no absolute ratios.”

According to Freedman, salvaging a housing project is a three-step process. First, a manager must evict the “unassimilable” tenants. Then, in projects where the ratio has become unbalanced, some minority families must be replaced with white families, gradually changing the social balance in one part of the project at a time. Finally, having altered the racial balance enough to attract both black and white families, the manager must evict the newly admitted tenants who have failed to adjust.

This process can work best in projects located in new, largely vacant neighborhoods, in sparsely occupied areas that are racially mixed, or occasionally in transitional communities. It does not seem to work in settled all-black areas. Ultimately, the success of the process will depend upon fair and firm management, a cooperative community, and tenants that want it to work.

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